Small Business Profile: A Bigger Picture
Houston Fearless 76 uses expertise in photo processing to move into a growing market for industrial strength pollution control systems for manufacturers.
By DARRELL SATZMAN
Staff Reporter
To appreciate the various incarnations Houston Fearless 76 has been through since it was established in 1936, a good place to start would be the name.
Founded by H.W. Houston, a business partner of Howard Hughes, the company invented a film processing system for the legendary mogul and later merged with Fearless Camera Corp., a maker of cameras and processing equipment. The company was expanded to include machinery for photochemical processes, but business waned by 1976, with only a few employees left on the payroll.
Sensing an opportunity, M.S. Lee, at the time a company manager, put up $100,000 with two other employees, secured a $265,000 Small Business Association loan, and borrowed another $70,000 from the now-defunct Southern California Job Creation Corp.
They added the bicentennial year to the end of the name and Houston Fearless 76 was born.
Lee bought out his two partners in 1981 and 1994 and is now president and chief executive.
Under Lee’s direction, Houston Fearless has broadened its scope to include not just film processing equipment, but making and servicing equipment for imaging, duplication and photographic paper processes.
“We are one of the few companies left making photo processing equipment,” said James Lee, M.S. Lee’s son and vice president of business operations. “The company has diversified in a way that kept us moving forward.”
That includes several acquisitions, including Merkel Technology, a Brea manufacturer of traffic photo citation systems, which Houston Fearless bought for $1.3 million in 1999, and Houston International, a Yuma, Ariz. maker of film and paper processors it acquired in 1997.
Last year, Houston Fearless, now based in Compton, created a subsidiary, Ascendant Solutions International, which became the outside sales and distribution arm for marketing Fujifilm USA Inc.’s micrographic products in the United States and Canada.
The core business remains manufacturing and servicing imaging systems, especially those used for microfilm. But it’s the newest venture, according to M.S. Lee, that holds the potential to take the business to a new level.
Playing off its strengths in photo processing, the company is branching into pollution control systems that filter contaminants, such as heavy metals, from water in various manufacturing processes.
It has sold a handful of the systems to the U.S. government for use in photographic labs, and Lee says that tightening environmental standards will mean a growing market in various commercial applications. The systems cost upwards of $500,000, depending on the chemicals in use and the specifications needed for a particular lab.
“We’ve spent millions of dollars and almost 15 years developing this product,” Lee says. “This is a milestone, a turning point for the company.”
Sandra Parker, an environmental specialist for NASA at the Johnson Space Center in Houston, said space officials bought one after traveling to Beale Air Force Base near Sacramento, where Houston Fearless had installed one of its systems to clean water used in developing photographs taken by spy planes.
“We looked at a number of systems over the years and the problem we kept running into was that most of the systems have cartridges that need to be replaced frequently, which is time consuming and expensive,” Parker said.
Public potential
Lee anticipates revenues of $28 million in 2002, and the company has bumped its workforce to 140, up from 120 last year. If the pollution control systems catch on, Lee figures that Houston Fearless could see up to $50 million in revenues by 2003.
Assuming that type of growth can be maintained, Lee says he would like to go public. But to do that, he knows he will have to show steady profit growth. Until now, profits have been modest, Lee said, because the company has reinvested in research and development. “It’s not a huge company but we’ve got a continuous growth pattern and we’ve got good employees,” Lee said.
Lee, 63, said he would like to retire in a few years, but not before working to establish Houston Fearless’ pollution control systems as the industry standard.
PROFILE: Houston Fearless 76
Year Founded: 1936
Core Business: Photographic film and paper processing; industrial waste water treatment systems; traffic citation systems.
Revenues in 2001: $17.5 million
Revenues in 2002: $28 million (projected)
Employees in 2001: 120
Employees in 2002: 140
Goal: To reach $40 million in revenues in 2003.
Driving Force: To build high-quality products and offer top service to customers while providing financial rewards for employees.
